Time to end free lunch for Google and Facebook

Facebook has a squad of 15,000 people tasked with reviewing content in more than 50 languages on its site but it still can’t stop the use of its platform by mass murderers. The soldier who killed 29 people in Thailand was able to post photographs and videos from the scene.

The tech giant’s business model relies on users generating content, with Facebook leveraging that and the data it harvests. That private army of screen jockeys, however, does not produce any news content. Original journalism is costly and fraught with a multitude of difficult issues — accuracy, defamation and distribution. Although Google and Facebook leave news gathering to the professionals, their algorithms insert themselves between the producers of stories, images, video and podcasts — such as The Australian and our peers at News Corp Australia — and customers.

This is neither good for journalism nor for our democracy and citizens. “Google and Facebook have grown to have almost unfettered market power with significant impacts on consumers,” concluded Australian Competition & Consumer Commission chairman Rod Sims, who led a world-first inquiry into the power of the digital platforms. As the ACCC found, 95 per cent of general searches in Australia are performed through Google, which gobbles up almost 96 per cent of search advertising revenue in Australia. Like other media companies, News Corp was seeking a strong legislated code of conduct that included all players, large and small, to be paid properly for the original content that leads to billions of clicks and dollars of ad revenue for the tech giants.

In its response, the Morrison government said platforms must enter “voluntary” codes of conduct to address many, though by no means all, of the concerns raised by media companies. Josh Frydenberg said the new code would govern “how revenue is shared, how content is accessed and presented, as well as getting forewarning about changes to algorithms that go to how the content is ranked online”.

This week News Corp Australia will begin talks with Google, with executive chairman Michael Miller writing in our pages on Monday that he is confident this year will mark “a turning point for media sustainability in the modern digital world”. The key here is fair compensation for original content. Last week News Corp global chief executive Robert Thomson said the company had begun to see “significant progress” in the “long battle” for equitable treatment from the dominant global tech platforms. He pointed to deals with Apple and Facebook that were “beginning to yield financial dividends”, particularly from The Wall Street Journal’s Facebook content licensing. These are important precedents for proper compensation.

Yet in Australia, Facebook is yet to confirm when it will join the talks on a code of conduct. The social media behemoth actually disputes the ACCC’s underlying analysis for the proposed code and appears intent on going its own way with one-off deals. Divide and conquer is not in the spirit of the local code or the government’s road map.

In December, the ACCC boss wrote to the chiefs of Google and Facebook, urging them to reach a deal with publishers quickly and in “good faith”. The Morrison government is expecting an update on the code by May. A full draft deal for the ACCC’s perusal is required by October. If the parties cannot agree on revenue sharing and other important matters, Canberra has said it will impose a mandatory code by November, with the Treasurer declaring “the government is not messing around”.

We are about to find out how serious the tech giants are about reducing the harm they cause and in promoting community welfare. The Morrison government has recognised “trust us”, business as usual for the tech titans is not sustainable. It’s time to end the free lunch. As Mr Miller noted, many media outlets won’t survive ­because, while their content has helped and is helping the platforms grow their businesses, returns for publishers are inadequate. In 2018, Google earned $US136bn, largely in advertising, while Facebook’s ad revenue was $US55bn. Their combined worth is greater than the value of our sharemarket. Google and Facebook need to act ethically and pay a premium to the premium creators generating these immense profits.